2011-12 and 2012-13 Tuition and Fee Recommendations

Introduction

Thank you, Mr. Chairman.

I will start by making some opening comments to introduce our tuition recommendations, then ask Vice President and Chief Financial Officer Neil Theobald to comment further.

A key question facing Indiana University has been—and will continue to be—how do we balance the financial needs of students and their families against the need both to preserve the university’s infrastructure and to maintain the affordability and accessibility that is expected of the state’s flagship university?

Thus, before board members begin considering these recommendations, I would like to make a few comments about the importance of investing in our facilities and ensuring IU remains affordable and accessible to Hoosier students.

Protecting Our Investment

Indiana University takes great pride in the quality of our facilities on all campuses. Those facilities represent over a century of wise investment by the people of Indiana.

However, this investment—like the investment in a home—carries the responsibility to protect it and to keep it safe, functional, and in good repair. These facilities have been entrusted to us and we take very seriously our obligation to maintain them.

As buildings and facilities age, problems and repairs start to accumulate. Roofs need to be replaced, windows need to be sealed, sidewalks and steps need to be repaired, and a host of other upkeep items need to be attended to—as any homeowner understands. To ignore these needs would be unwise and imprudent because what is not repaired now will have to be repaired later at much greater cost.

On the IU Bloomington campus, serious problems exist right now with our ability to adequately heat and cool our academic buildings. In addition, many of those buildings are 50 to 100 years old, and they are in need of structural repairs and maintenance.

Across all seven IU campuses, we now have a backlog of needed repair and maintenance projects totaling more than $600 million for our 900 buildings and associated infrastructure. Many of these expenditures are needed to bring our facilities into compliance with new building codes and to ensure their safety for students and faculty. These are government-imposed mandates with which we must comply.

Lack of R&R Funding/Temporary Fee

Over the past decade, the state of Indiana has funded only about 20% of the R&R formula. For the first time, the present state budget provided no funding for R&R needs for public universities.

Yet the need to protect the state’s investment in the buildings and infrastructure at IU remains, and we have an obligation to address it. It is because of this obligation that we have recommended a temporary R&R fee of 2% at IU Bloomington and IUPUI, and 1% at the regional campuses.

In addition, we recommend tuition increases of 3.5% at IU Bloomington and 2.5% at IUPUI and the regional campuses, which are fully in accord with the non-binding tuition targets set by the Indiana Commission for Higher Education. As well, all program fees will only increase by these amounts with the exception of the School of Nursing.

Many other colleges and universities, including Purdue and Ivy Tech, are charging similar fees for R&R.

All revenue from this fee will be sequestered and used only for needed R&R projects. And we intend to eliminate this fee when the state once again fully funds the R&R formula.

It is important to note that revenue from this fee provides only two-thirds of the funds IU needs for these repairs to meet the target we have set for this biennium. Therefore, we are also allocating funding to R&R from savings achieved in other efficiency measures, including the recent announcement of the elimination of the School of Continuing Studies, which is expected to save the university up to $4 million. We will also apply some of IU’s financial reserves for this purpose.

The Market Speaks on IU's Affordability

Concern is regularly expressed about the need for universities to be affordable and accessible. Let me state as emphatically as I can that Indiana University is both! We are affordable: The Federal Department of Education ranks us the most affordable university in the Big Ten. And the market speaks. In the last academic year, we saw a record 109,000 students enrolled at IU, with new enrollment records set on nearly every campus. This is not the mark of a university that is seen as unaffordable.

Efforts Toward Greater Accessibility

And we are accessible.

For example, we anticipate increasing institutional aid for in-state undergraduates by nearly $20 million in FY 2012. According to our estimates, we will provide more than $88 million in institutional gift aid, which includes scholarships and grants, to in-state undergrads in FY 2012. This represents an increase of nearly $19 million—or more than 21% from the current fiscal year. Institutional gift aid at IU Bloomington is expected to rise nearly 30%—to more than $68 million. IUPUI is expected to see a more than 18% increase to nearly $16 million. Our regional campuses expect to see an over 11% increase to nearly $4 million.

In addition, IU has exceptional programs to ensure students from low-income families can come to IU if they meet the academic requirements. Likewise, our scholarships for high-achieving Hoosier students essentially make it possible for any high-school student in Indiana to earn his or her way into IU with a very generous grant—if they perform at a high level in high school.

This was a major goal of the recently completed, $1.1 billion Matching the Promise Campaign for IU Bloomington, which raised more than $338 million for student scholarships and fellowships. In 2011-12, IU Bloomington will spend approximately $65 million—including around $15 million for freshmen—on merit- and need-based scholarship aid for students.

Conclusion

As I have stated previously, spending scarce resources on mundane things like repair and maintenance will never win a university president a popularity contest. There are no ribbon cutting ceremonies for a new roof or a replaced heating and cooling system. But this is work that must be done for the safety of today’s students and to ensure that future IU students will have the same outstanding facilities that the state has entrusted to us.

Now let me turn over to Vice President and Chief Financial Officer Neil Theobald to present the proposed 2011/13 tuition recommendations.